India’s Diamond Factories Unregulated

The furor over the benzene poisoning of four diamond cutters in India’s diamond city Surat, has led to the unearthing of the startling fact that only 431 of over 10,000 diamond units in the state of Gujarat have been registered under the Factories Act that specifies the working conditions of factory workers among other things. As many as 5,566 government-instituted cases against unregistered units are pending in court, according to a report in the Indian Express newspaper on June 28.

The paper quoted officials as saying that the fact that a huge amount of black money is generated by the industry was one of the reasons why units tried to avoid being registered. Avoiding registration also means not having to stick to proper working conditions inside the factories and also avoiding regular inspections. If the units register they also have to follow the provisions of national and local municipal laws. They also have to pay taxes.

Director of Industrial Safety and Health N.D. Joshiyara has been quoted by the paper as saying that getting these units registered has always been a problem because a strong lobby works against registration and that if the units are not registered, officials of his department can neither inspect them nor enforce regulations. For this reason, he said, the diamond industry is largely unregulated.

Chandrakant Sangvhi, a leading diamond merchant and the Gujarat region convener of the Gem & Jewellery Export Promotion Council (GJEPC), told Rapaport News that it was indeed true that a large number of diamond units were not registered. He said, “Unfortunately, there is lack of initiative both from the diamond unit owners and government officials. However, things are changing. We are creating awareness and hopefully, more units will realize that registering themselves will be beneficial to them. Yes, there are ‘disadvantages,’ but is in the interest of everyone to work together.”

Sanghvi said that there were multiple reasons behind the resistance of the diamond units to register themselves. “You should understand that a vast majority of these units are small. They do not want to get entangled in what they feel is a maze of bureaucratic rules. But these diamond unit owners should also understand that implementation of laws is what will benefit the industry if you look at the larger picture. It is for the government to enforce the law and we at the GJEPC can only create awareness.”

Surat Diamond Association president Nanubhai Vanani however disagreed that the city diamond industry needed government rules and regulations. “First of all, I do not have any idea of the number of unregistered diamond units, though I agree a majority are not registered. However, when we adhere to all rules and regulations, when we take care of social security of the workers and when we give them a good atmosphere to work in, we do not see any necessity for government rules and regulations. We in the diamond industry are capable of handling our problems,” he told Rapaport News.

When it was pointed out that non registration was a major issue because of the benzene poisoning case, Vanani said, “It is a one-of-a-kind problem and we are taking measures to tackle the issue. I do not think it is fair to blame the industry as a whole based on this one singular issue.”

The Indian Express also quoted Vanani as saying, “You come and see the diamond units. “They are as good as five star hotels… We pay handsome salaries. So why should we bear interference from any outside authority?”

Vanani, however, told Rapaport News that the awareness was being spread in the industry. “Yes, we do see a synergetic partnership between the industry and the government in the future. But it will take time,” he said.

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